Silver surges to 14-year high on Fed rate cut bets

Silver surged to a 14-year high of $42.3 per ounce, lifted by expectations of US Federal Reserve rate cuts and a shift toward safe-haven assets. The metal has gained more than 45% since the start of the year.

Cooling labor market data and moderate inflation have strengthened bets that the Fed will lower its policy rate by 25 basis points next week, with analysts forecasting up to three cuts in total by year-end.

- Dollar weakness boosts demand

Falling bond yields, waning demand for the US dollar, and expectations of looser US monetary policy have added momentum to silver’s rally. Investors are also seeking shelter in precious metals amid geopolitical tensions and financial uncertainty.

Industrial demand from sectors such as semiconductors, renewable energy, solar power, and electronics has further supported prices, while retail investors increasingly turn to silver as gold trades near record highs.

Silver last reached its all-time peak of $49.8 per ounce in 2011 during the aftermath of the global financial crisis, before falling back as the Fed tightened policy.

- Expert view

Zafer Ergezen, a futures and commodity markets expert, said demand for precious metals is being driven by US inflation data and weak non-farm payrolls, with gold also nearing $3,700 per ounce.

“As rate cut estimates rise, and if we see optimism in the US — particularly in growth data, silver may rise even further,” he told Anadolu.

He added: “If the US and China data show economic recovery, the gold/silver ratio may decline towards the 80 level and even below that this year — we saw the US non-farm payrolls were weak and the previous data releases also pointed to weak payrolls. Even with rate cuts, the Fed may be a bit late — this can indicate the economic slowdown will continue and I expect the gold/silver ratio to fluctuate at current levels for a while.”

Ergezen said sharp losses are unlikely: “The precious metal is expected to move parallel to gold, then the silver swing above $40 per ounce will continue.”

“If we see economic recovery — and even better than expected recovery — we may then see silver starting to trend upward again and regain value relative to gold,” he added.